Telephone Lake project Cenovus Energy Inc. is a Canadian oil company. We re committed to applying fresh, progressive thinking to safely and responsibly unlock energy resources the world needs. Our operations include oil sands projects in northern Alberta, which use specialized methods to drill and pump the oil to the surface. As well, we have natural gas and oil production across Alberta and southern Saskatchewan. We also have 50 percent ownership in two U.S. refineries. Plain language document
Cenovus has received regulatory approval for the proposed Telephone Lake Project (the Project). An Environmental Impact Assessment (EIA) for the Project was initially filed in 2007 by Encana Corporation, the predecessor in interest to Cenovus. As part of the regulatory process for major project applications the Province of Alberta asks resource companies to produce a plain language document (PLD) to provide an overview of their proposed project. This PLD will re-introduce the proposed Project, which was known previously as the Borealis in-situ project. While the information in this document is brief, more in-depth information has been and will continue to be provided to potentially impacted communities through the consultation process. Project history Telephone Lake is a unique oil sands project because there is a layer of groundwater (referred to as top water) directly above the oil. The top water layer is between 150 and 175 metres below the surface. Because of this layer, the Project was put on hold while new regulatory guidelines for top water management were developed by Alberta Environment (AENV). Since the original application was submitted in 2007, some details of the Project have changed and the project development area has increased from approximately 36 sections to approximately 61 sections. Project overview The Project is expected to have an initial production capacity of 90,000 barrels per day (bbls/d), over two phases and an estimated project life of up to 40 years. We plan to use a technology called steam-assisted gravity drainage (SAGD) to recover oil from the Middle McMurray formation. We also plan to use dewatering technology to remove the top water to ensure that the SAGD process is efficient. The total size of the project footprint is 1606 hectares. This number refers to the cumulative area that will be cleared throughout the life of the Project. Not all of this area will be cleared or in operation at one time as continual decommissioning and reclamation of pad sites will occur approximately every six to 12 years. The central plant is expected to cover up to 194 hectares, with an estimated total of up to 104 well pads supporting up to 971 well pairs over the life of the Project. The initial SAGD well pads will be up to seven hectares. The total construction workforce for the Project is estimated to be up to 1,200 people with an operations staff of up to 335 people. We are committed to using local contractors and hiring local workers as much as possible during the construction and operation of the Project. Project location The proposed Project is located in northern Alberta, about 90 kilometres northeast of Fort McMurray. The project area is in a remote location, primarily within Township 93 and 94, Range 3, W4M. The closest populated area is the community of Fort McKay. Telephone Lake plain language document
Understanding top water At Telephone Lake, there are a number of aquifers located above and below the oil. An aquifer is an underground formation where groundwater can flow through the spaces between the sand grains. As mentioned earlier, the proposed Project is unique because of the top water, which occurs directly above the oil. The top water is non-saline (fresh) according to AENV salinity standards, however it contains traces of oil, meaning it s not suitable for human consumption or agricultural use without substantial treatment. In order to protect the groundwater, we have been conducting ongoing monitoring in different aquifers in the area since 2007. If the Project is approved, monitoring would continue throughout the life of the Project (and even after it s finished) to make sure our operations are not impacting water at a regional level. Understanding dewatering Top water is not present in all areas where there is oil. Where there is top water present, and in order for the oil recovery process to be efficient, the top water must be moved before SAGD can begin. The process of moving the water is called dewatering. During dewatering, a separate system of wells will work together to displace top water. The top water zone is approximately 160 metres (525 feet) below the surface. The process works as follows: The air injector well injects air into the top water zone and helps displace the water The water producer well removes most of the water from the top water zone and pumps it up to the surface where it then flows through a pipeline to a water injector well The water injector wells work to re-locate the displaced water Surplus displaced top water will be injected into a deeper aquifer with similar water quality A small amount of displaced water will be used for steam generation TELEPHONE LAKE PLAIN LANGUAGE DOCUMENT
Understanding SAGD Once we remove the top water, we can then begin SAGD, a technology that uses steam to heat the oil so that the oil can be pumped to surface. SAGD works in the following process: Two horizontal wells are drilled one above the other approximately five metres (16 feet) vertically apart High temperature steam is injected into the upper (injector) well creating a steam chamber in the formation The steam heats and softens the oil The softened oil flows more freely and gravity drains it to the lower (producing) well The oil is then pumped to the surface and piped to the facility where it is treated for delivery to market Water also comes to the surface with the oil and is removed and reused for steam production. Over 90 percent of the water is recycled and reused No surface water from rivers or lakes will be used for steam production and no waste water will be discharged into rivers or lakes (disposal wells are used to inject it deep underground) The steam chambers at Telephone Lake are expected to be located at a depth of approximately 150 metres (492 feet) below the surface in areas with a cap rock barrier that is up to 65 meters (213 feet) thick. TELEPHONE LAKE PLAIN LANGUAGE DOCUMENT
Preliminary development plan The Project is expected to be constructed in two 45,000 bbls/d phases. We will use the wealth of experience we gained by constructing and operating SAGD facilities at Christina Lake and Foster Creek to design and operate our projects efficiently. We will also continue to look for ways to reduce our overall water use by improving reuse and recycle practices and minimizing the area we need to clear for development. The proposed Project is expected to include construction of the following: The central processing site to be constructed in phases is expected to include: oil treatment facilities with a maximum treating capacity of 90,000 bbls/d steam production facilities with up to 10 generators including two co-generation units water treatment facilities An estimated total of 90 SAGD well pads supporting up to 971 SAGD well pairs over the life of the Project Dewatering facilities consisting of: up to seven dewatering wells on 56 of the 90 SAGD pads up to ten additional dewatering only pads Up to four separate disposal pads and 20 disposal wells over the life of the Project A groundwater monitoring network (presently comprises 46 groundwater monitoring wells) Roads, pipelines and power lines required to operate the wells and transport the oil to the central processing site, all sharing a common corridor where possible to reduce environmental footprint The facility is expected to be constructed in a phased approach stretching over six years. The well pads and well pairs will be on a continual decommissioning and reclamation schedule over the entire 40-year life of the facility. This will be based on the typical well pad life of six to 12 years. The proposed Project will require related infrastructure such as electrical power lines, fuel gas pipelines and oil transportation pipelines. Related infrastructure will be applied for separately, as appropriate. Impacts of the Project We will involve the community through meetings and planning sessions to promote an understanding of the potential short and long-term impacts of the proposed Project. Potential impacts will be addressed in the EIA along with monitoring and mitigation measures which will include the following topics: Air quality, climate and noise Surface water quality Groundwater quality and quantity Fish, wildlife and vegetation Terrain and soils Historic resources Traditional ecological knowledge and land use Public health and safety Socio-economic conditions Project duration The timeline for starting the proposed Project depends on regulatory approvals, market conditions and company approval. As part of the regulatory process for the Project, we: Prepared an EIA based on the final Terms of Reference (TOR) issued by AENV Submitted the EIA to AENV and the Energy Resources Conservation Board (ERCB) as part of the project approval application Consulted with community members and the public, record any concerns or suggestions and communicate how these concerns will be addressed Assuming company approval to proceed, construction is expected to last for approximately 10 years with a projected operational life of approximately 40 years. The timing of construction start for each of the phases is dependant on market conditions and company approval. Telephone Lake plain language document
Stakeholder consultation Project disclosure and community consultation Filed revised joint application and EIA with AENV and the ERCB Project updates Inform stakeholders and regulators about the proposed changes to the development plans for Telephone Lake This will include individual meetings, presentations to stakeholders, and open houses on the development plans Provide feedback at any future community open house(s) held as the Project progresses or at area stakeholder presentations We will continue to follow-up on stakeholder input Re-commenced in 2010 and will be ongoing December 2011 Ongoing We recognize the importance of building and maintaining productive relationships with communities. We believe in working closely with local residents and other stakeholders to help them understand our projects, and to understand their needs and expectations. Telephone Lake plain language document
Glossary of terms air injector well a type of well used during the dewatering process that injects air into the top water zone to displace the ground water. aquifer an underground formation where water can flow through the spaces between the sand grains. co-generation a plant that simultaneously produces electricity and steam from one energy source. dewatering the process by which top water is removed to prepare the reservoir for SAGD. environmental impact assessment (EIA) a large study and report that is often required by Alberta Environment before approval will be granted for field development of certain projects. The EIA contains a large amount of field data, and includes a field inventory of environmental information which establishes a pre-project baseline for later comparison with conditions after the project has been initiated so that the project s impact on the environment can be measured. The EIA examines the environmental and socio-economic effects of the construction, operation and reclamation of a proposed project. The EIA must be prepared in accordance with the final terms of reference (TOR) established for that project. It must also be prepared in accordance with requirements prescribed under the Environmental Protection and Enhancement Act and it must also include a discussion of issues raised during the public consultation process. horizontal well a well that typically starts off at the surface in a vertical direction, but as the well is drilled, the direction gradually and continuously alters so eventually drilling occurs in a horizontal direction. Using horizontal drilling, it is possible to drill multiple wells from a small area of land. hydrocarbon naturally occurring organic compound that comprises hydrogen and carbon. oil a general term used to describe liquid hydrocarbons. steam-assisted gravity drainage (SAGD) a technology that involves drilling pairs of horizontal wells into underground formations, and injecting steam. The steam is pumped into the upper well, heats the oil, and causes the oil to flow into the bottom well so it can be pumped to the surface. steam chamber the area within the reservoir where the steam has risen from the steam injection well and production well through the sand layer. As the steam chamber develops it forms the shape of the upper half of an hour glass. Within the steam chamber, oil is heated to a point where it melts and flows towards the bottom of the chamber and can be pumped to the surface. steam generator a large container with pipes running through it. Water is piped into the container, heated with natural gas, and exits as steam. steam production facilities equipment (containers, steam generators and heat exchangers) used to make the steam that is injected into the wells. top water groundwater that is in direct contact with oil. water producer well a type of well used during the dewatering process that brings top water up to the surface. water injector well a type of well used to re-locate top water during the dewatering process. water treatment facilities equipment (containers, softeners and filters) used to remove contaminants from both the make-up water and produced water so that it can be heated to make steam inside the steam generators. well pad an area that is cleared and prepared for SAGD wells and/or dewatering wells to be drilled. well pair the two types of wells that are used during the SAGD process (the steam injector and the producer) make up a well pair. Telephone Lake plain language document
Contact information For more information or to provide comments about Cenovus s proposed Telephone Lake project please contact: Darwin Bateyko, Group Lead, Local Community Relations Phone: 403.766.8908 Toll-Free: 1.877.766.2066 Email: telephonelake@cenovus.com Notice about Cenovus and Encana Cenovus, when used in this document, refers to Cenovus TL ULC. Cenovus TL ULC is a wholly owned subsidiary of Cenovus Energy Inc., is the operator for Telephone Lake Partnership. The previous EIA for the Project that was initially filed in 2007 was by Encana Corporation, a predecessor to Cenovus Energy Inc. Advisory regarding forward-looking statements This document contains forward-looking information prepared and submitted pursuant to Alberta regulatory requirements and is not intended to be relied upon for the purpose of making investment decisions including, without limitation, to purchase, hold or sell any securities of Cenovus Energy Inc. Additional information regarding Cenovus Energy Inc. is available at www.cenovus.com. 233883 Nov. 2014 Cenovus Energy Inc. 2014